MACCABI USA, INC.

FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2019 AND 2018

AND

INDEPENDENT AUDITORS’ REPORT

MACCABI USA, INC.

TABLE OF CONTENTS

Page

Independent Auditors’ Report 1-2

Financial Statements

Statements of Financial Position 3

Statements of Activities and Changes in Net Assets 4

Statements of Functional Expenses 5-6

Statements of Cash Flows 7

Notes to Financial Statements 8-20

INDEPENDENT AUDITORS' REPORT

To the Board of Directors Maccabi USA, Inc. Philadelphia, Pennsylvania

We have audited the accompanying financial statements of Maccabi USA, Inc. (a not-for-profit organization), which comprise the statements of financial position as of December 31, 2019 and 2018, and the related statements of activities and changes in net assets, functional expenses and cash flows for the years then ended, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Maccabi USA, Inc. as of December 31, 2019 and 2018, and the change in its net assets and its cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America.

Correction of Error

As discussed in Note 3 to the financial statements, certain errors in reporting contribution revenue with donor restrictions for the year ended December 31, 2018, were discovered by management of the Organization during the current year. Accordingly, amounts reported for contribution revenue and release of net assets have been restated in the 2018 financial statements to correct the error. Our opinion is not modified with respect to that matter.

Philadelphia, Pennsylvania November 20, 2020

2 MACCABI USA, INC.

STATEMENTS OF FINANCIAL POSITION

December 31, 2018 2019 (As Restated) ASSETS Current assets Cash and cash equivalents$ 1,184,611 $ 418,311 Investments, Israel bonds 5,000 5,000 Pledges receivable, current portion, net of allowance - 27,960 Prepaid expenses and other 49,431 455,942 Due from related parties 15,175 5,741 Total current assets 1,254,217 912,954

Property and equpiment, net 5,105 3,889 Pledges receivable, net of current portion and allowance 10,500 18,626 15,605 22,515 Total assets$ 1,269,822 $ 935,469

LIABILITIES AND NET ASSETS Current liabilities Line of credit$ - $ 150,000 Accounts payable and accrued expenses 93,982 234,431 Deferred rent - 11,551 Deferred revenue - 315,078 Total current liabilities 93,982 711,060

Commitments

Net Assets Without donor restrictions 192,434 (316,214) With donor restrictions 983,406 540,623 Total net assets 1,175,840 224,409 Total liabilities and net assets $ 1,269,822 $ 935,469

See notes to financial statements. 3 MACCABI USA, INC.

STATEMENTS OF ACTIVITIES AND CHANGES IN NET ASSETS

Year Ended December 31, 2019 2018 (As Restated) Without Donor With Donor Without Donor With Donor Restrictions Restrictions Total Restrictions Restrictions Total

Support and revenue Program revenues$ 3,541,182 $ - $ 3,541,182 $ 891,210 $ - $ 891,210 Contributions Support of games 549,411 134,402 683,813 61,719 93,148 154,867 General 110,025 419,961 529,986 138,347 468,822 607,169 In-kind donation 60,000 - 60,000 60,000 - 60,000 Board member dues 35,164 - 35,164 26,392 - 26,392 Special events (net of direct donor benefit of $90,563 in 2019 and $30,104 in 2018) 124,299 77,702 202,001 366,359 - 366,359 Interest income 4,000 - 4,000 4,000 - 4,000 Net assets released from restriction 189,282 (189,282) - 50,242 (50,242) - Total support and revenue 4,613,363 442,783 5,056,146 1,598,269 511,728 2,109,997

Expenses Program services 3,279,973 - 3,279,973 1,857,576 - 1,857,576 Management and general 414,699 - 414,699 399,749 - 399,749 Fundraising 410,043 - 410,043 374,598 - 374,598 Total expenses 4,104,715 - 4,104,715 2,631,923 - 2,631,923

Change in net assets 508,648 442,783 951,431 (1,033,654) 511,728 (521,926)

Net assets, beginning of year (as restated, see Note 3) (316,214) 540,623 224,409 717,440 28,895 746,335 Net assets, end of year $ 192,434 $ 983,406 $ 1,175,840 $ (316,214) $ 540,623 $ 224,409

See notes to financial statements. 4 MACCABI USA, INC.

STATEMENT OF FUNCTIONAL EXPENSES

YEAR ENDED DECEMBER 31, 2019

Program services Management and Maccabiah Games European Games Pan-Am Games Other Programs Total General Fundraising Total

Personnel Salaries$ 66,294 $ 152,477 $ 165,736 $ 26,518 $ 411,025 $ 106,071 $ 145,848 $ 662,944 Payroll taxes and employee benefits 11,443 26,319 28,608 4,577 70,947 18,308 25,175 114,430 Total personnel costs 77,737 178,796 194,344 31,095 481,972 124,379 171,023 777,374

Other expenses Advertising and marketing 9,482 - 2,217 - 11,699 - 5,002 16,701 Apparel - 86,764 161,141 - 247,905 - 5,740 253,645 Alumni events - - - 17,458 17,458 - - 17,458 Bad debt recovery - - - - - (6,374) - (6,374) Bank fees 742 36,678 73,070 - 110,490 2,831 113,321 Conferences 2,080 4,783 5,199 832 12,894 3,328 4,575 20,797 Depreciation - - - - - 445 - 445 Dues 289 664 722 116 1,791 462 635 2,888 Insurance 7,015 21,133 17,536 2,806 48,490 11,223 15,432 75,145 Interest - - - - - 1,984 1,984 IT support services 5,278 12,138 13,194 2,111 32,721 8,444 11,611 52,776 Marketing 2,400 7,181 6,000 960 16,541 3,840 5,280 25,661 Membership fees 15,800 36,340 39,500 6,320 97,960 25,280 34,760 158,000 Office expenses 2,025 13,992 11,571 809 28,397 4,058 4,455 36,910 Other expenses 832 818 12,208 - 13,858 - - 13,858 Postage and shipping 635 3,903 8,944 112 13,594 448 37,971 52,013 Printing 12 - - - 12 - 1,502 1,514 Professional fees - - - - - 213,622 213,622 Raffle - 4,200 6,300 - 10,500 - - 10,500 Registration - 331,646 1,013,362 - 1,345,008 - 7,440 1,352,448 Rent 9,085 20,894 22,711 3,634 56,324 14,535 19,986 90,845 Security - 52,440 43,187 - 95,627 - - 95,627 Special events ------76,112 76,112 Team - 23,993 21,785 101,779 147,557 - - 147,557 Telephone 722 4,048 3,809 289 8,868 1,155 1,588 11,611 Travel and entertainment 2,268 243,017 227,062 798 473,145 3,191 4,389 480,725 Utilities 1,155 2,657 2,888 462 7,162 1,848 2,542 11,552 Total expenses$ 137,557 $ 1,086,085 $ 1,886,750 $ 169,581 $ 3,279,973 $ 414,699 $ 410,043 $ 4,104,715

See notes to financial statements. 5 MACCABI USA, INC.

STATEMENT OF FUNCTIONAL EXPENSES

YEAR ENDED DECEMBER 31, 2018

Program services Management Maccabi Youth and Games European Games Pan-Am Games Other Programs Total General Fundraising Total

Personnel Salaries$ 246,557 $ 144,533 $ 178,541 $ 68,016 $ 637,647 $ 59,514 $ 153,035 $ 850,196 Payroll taxes and employee benefits 33,190 19,457 24,034 9,156 85,837 8,011 20,601 114,449 Total personnel costs 279,747 163,990 202,575 77,172 723,484 67,525 173,636 964,645

Other expenses Advertising and marketing 4,240 - 4,684 - 8,924 - 12,029 20,953 Alumni events - - - 34,012 34,012 - - 34,012 Apparel 28,533 500 500 - 29,533 - 960 30,493 Bad debt recovery - - - - - (3,000) - (3,000) Bank fees 23,690 5,278 9,417 - 38,385 4,286 - 42,671 Conferences - - - 19,261 19,261 - - 19,261 Depreciation - - - - - 1,377 - 1,377 Dues - - - - - 2,530 - 2,530 Insurance 26,448 1,538 1,900 724 30,610 31,491 1,629 63,730 Interest - - - - - 1,484 - 1,484 IT support services 16,848 9,877 12,201 4,648 43,574 4,067 10,458 58,099 Marketing - 2,951 - - 2,951 13,300 - 16,251 Membership fees 44,207 25,915 32,012 12,195 114,329 10,671 - 125,000 Newsletter 32,206 - - - 32,206 - 10,735 42,941 Office expenses 4,856 - - - 4,856 39,852 - 44,708 Postage and shipping 6,166 - 5 - 6,171 3,758 23,663 33,592 Printing 135 - - - 135 3,202 - 3,337 Professional fees - - - - - 157,082 - 157,082 Raffle expenses 10,500 - - - 10,500 - - 10,500 Registration 320,101 - - - 320,101 - 7,230 327,331 Rent 18,563 10,882 13,442 5,121 48,008 4,480 11,522 64,010 Repairs and maintenance - - - - - 1,381 - 1,381 Security 6,660 - - - 6,660 - - 6,660 Special events ------122,736 122,736 Team expenses 10,718 - 10,769 14,632 36,119 - - 36,119 Telephone 929 135 150 - 1,214 12,174 - 13,388 Travel and entertainment 338,003 391 8,149 - 346,543 31,548 - 378,091 Utilities - - - - - 12,541 - 12,541 Total expenses$ 1,172,550 $ 221,457 $ 295,804 $ 167,765 $ 1,857,576 $ 399,749 $ 374,598 $ 2,631,923

See notes to financial statements. 6 MACCABI USA, INC.

STATEMENTS OF CASH FLOWS

Year Ended December 31, 2019 2018

Cash flows from operating activities Change in net assets$ 951,431 $ (521,926) Adjustments to reconcile change in net assets to net cash provided by (used in) operating activities Depreciation 445 1,377 Bad debt recovery (6,374) (3,000) Changes in operating assets and liabilities Accounts receivable - 95,890 Pledges receivable 42,460 52,040 Prepaid expenses and other 406,511 (350,464) Due from related parties (9,434) (5,741) Accounts payable and accrued expenses (140,449) (163,383) Deferred rent (11,551) 11,551 Deferred revenue (315,078) 295,339 Net cash flows provided by (used in) operating activities 917,961 (588,317)

Cash flows used in investing activities Acquisition of equipment (1,661) (3,609)

Cash flows (used in) provided by financing activities Net (repayments) borrowings on line of credit (150,000) 150,000

Net increase (decrease) in cash and cash equivalents 766,300 (441,926)

Cash and cash equivalents, beginning of year 418,311 860,237 Cash and cash equivalents, end of year $ 1,184,611 $ 418,311

Cash paid for interest$ 1,984 $ 1,484

See notes to financial statements. 7 MACCABI USA, INC.

NOTES TO FINANCIAL STATEMENTS

1 - NATURE OF ORGANIZATION

Maccabi USA Inc., (the “ Organization”), formerly known as United States Committee Sports for Israel, Inc., is the official sponsor of the United States team to the World Maccabiah Games in Israel, as well as other international Maccabi Games in Latin America, Australia, and Europe. Each team is comprised of Jewish athletes from the United States who represent their country in athletic competition and learn about the Jewish culture and heritage in the host country where the Games take place. It is the unique combination of sports and history that allows Maccabi USA to change the lives of all who participate in the Games. Athletes leave the competition with a feeling of accomplishment for their athletic ability, great new friends from around the world and most important, a sense of pride for their unique culture and heritage. They feel a special connection with their fellow Jews from around the world and a strong connection to the State of Israel.

Maccabi USA distinguishes themselves by:

 Sponsoring the United States Team to the World Maccabiah Games.  Supporting programs such as the JCC Maccabi Games which introduce American Jewish youth to their heritage by sponsoring sports-related programs and activities.  Supporting programs that enhance participation of American Jewish youth with their brethren throughout the world.  Supporting athletic facilities and programs in Israel.  Being a member of Maccabi World Union and worldwide Maccabi movement.

To further its mission, Maccabi USA lends support to the Maccabi World Union, Project Tikvah, The Wingate Institute, Israel Sports Center for Disabled, Israel's Special Olympics and Paralympics teams, the International Jewish Sports Hall of Fame and Israel's Olympic athletes.

Maccabi USA is one of 50 territorial representatives of Maccabi World Union, the international governing organization. Maccabi World Union has a membership of more than 400,000 throughout the world. The Maccabi movement, with ties to the ideals of Zionism and named for Judah (The Hammer) Maccabee, symbolizes Jewish excellence in sport.

The Organization is supported primarily through contributions and program revenues associated with the athletic games.

Maccabi USA is officially recognized by the United States Olympic and Paralympic Committee as a Multi-Sport Organization and is an adjunct member of the Conference of Presidents of Major Jewish Organizations.

8 MACCABI USA, INC.

NOTES TO FINANCIAL STATEMENTS

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation The accompanying financial statements reflect the accounts of the Organization and have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles (US GAAP) and presented in accordance with Accounting Standards Update (“ASU”) 2016-14, Presentation of Financial Statements of Not-for-Profit Entities.

Net Assets Net assets, revenues, and other support are classified based on the existence or absence of donor- imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows:

Net Assets Without Donor Restrictions – Net assets available for use in general operations and not subject to donor restrictions. The net assets whose use is restricted by the Board of Directors are also included within net assets without donor restrictions. The Organization had no board restricted net assets at December 31, 2019 and 2018.

Net Assets With Donor Restrictions – Net assets subject to donor-imposed restrictions. Some donor-imposed restrictions are temporary in nature, such as those that will be met by the passage of time or other events or purposes specified by the donor. Other donor-imposed restrictions are permanent in nature, where the donor stipulates that such resources be maintained in perpetuity. Generally, the donors of these assets permit the Organization to use all or part of the income earned on related investments for general or specific purposes.

Support and Revenue Recognition In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”). The standard’s core principle is that an organization will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the organization expects to be entitled in exchange for those goods or services.

This standard also includes expanded disclosure requirements that result in an organization providing users of financial statements with comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the organization’s contracts with customers. The standard supersedes existing revenue recognition guidance for contracts with customers. This standard was effective for annual reporting periods beginning after December 15, 2018. Effective January 1, 2019, the Organization adopted ASC 606 using the modified retrospective method. There was no cumulative effect of adopting ASC 606 to be recognized as an adjustment to opening net assets as of January 1, 2019. The initial application was applied to all contracts outstanding at January 1, 2019.

9 MACCABI USA, INC.

NOTES TO FINANCIAL STATEMENTS

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Support and Revenue Recognition (Continued) The Organization determines the amount of revenue to be recognized from contracts with customers through application of the following steps:

 Identification of the contract, or contracts with customer;  Identification of the performance obligations in the contract;  Determination of the transaction price;  Allocation of the transaction price to the performance obligations in the contract; and  Recognition of revenue when or as the Organization satisfies the performance obligations.

Program revenues – Program revenues include amounts paid by athletes to participate in the various Maccabi games. A portion of the amount paid by the athlete is considered a contribution to the Organization and has been classified as such with the Statement of Activities. These revenues are recognized at a point in time during the year in which the game is held. Accordingly, amounts received in advance are deferred until the event occurs. Application fees are recognized when the application is received regardless of when games will take place.

In June 2018, the FASB issued ASU 2018-08, Not-for-Profit Entities – Clarifying the Scope and Accounting Guidance for Contributions Received and Contributions Made (Topic 958). This ASU provides a more robust framework to determine when a transaction should be accounted for as a contribution or as an exchange transaction and provides additional guidance about how to determine whether a contribution is conditional. The Organization adopted ASU 2018-08 as of January 1, 2019 under the modified prospective approach. The adoption of this ASU did not materially impact the financial statements.

Contributions – Unconditional promises to give cash and other assets to the Organization are reported as contributions and recorded at fair value on the date the promise is received. All contributions are considered to be available for use without restriction unless specifically restricted by the donor. Contributions received for specific purposes or with donor stipulations are reported as increases in net assets with donor restrictions. When a donor restriction expires, that is, when a stipulated time restriction ends or purpose restriction is accomplished, net assets with donor restrictions are reclassified to net assets without donor restrictions and reported in the statement of activities as net assets released from restrictions. Restricted contributions received, whose restrictions are met in the same reporting period, are reflected as without restrictions.

10 MACCABI USA, INC.

NOTES TO FINANCIAL STATEMENTS

2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Support and Revenue Recognition (Continued) Special events – Revenue earned from sponsorships or attendance at fundraising events is recognized at the time of the event. Revenue from sponsorships is considered contribution revenue as they are generally nonreciprocal transactions. Revenue from ticket sales are considered an exchange transaction for the value received. Amounts received in advance of the event are recorded as deferred revenue (contract liability) until the event is held. Expenses incurred in connection with an event that provide direct benefit to the donors reported offsetting special event revenue in the Statement of Activities and Changes in Net Assets. For the year ended December 31, 2019, the revenue from special events amounted to $292,564, of which $90,563 was earned as a benefit to the donor. For the year ended December 31, 2018, the revenue from special events amounted to $396,463, of which $30,104 was earned as a benefit to the donor.

Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents The Organization considers all highly liquid debt instruments purchased with an original maturity of three months or less, which are not intended to be held for investment purposes, to be cash equivalents

Investments Investments in equity securities with readily determinable fair values and all investments in debt securities are measured at fair value in the statement of financial position. Any unrealized gains or losses on investments are included in the statement of activities and changes in net assets.

Unconditional Promises to Give Unconditional promises to give are recorded as received at the present value of their net realizable value, using interest rates applicable to the years in which the promises are received to discount these amounts. Amortization of discounts is included in contribution revenue. The Organization uses an allowance method to determine uncollectible promises receivable. The allowance for doubtful accounts was $41,500 and $47,874 as of December 31, 2019 and 2018, respectively.

Property and Equipment and Depreciation Property and equipment are recorded at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets ranging from 3 to 5 years. The cost of maintenance and repairs is charged to expense as incurred.

11 MACCABI USA, INC.

NOTES TO FINANCIAL STATEMENTS

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

In-Kind Contributions Contributions of donated services that create or enhance non-financial assets or that require specialized skills, are provided by individuals possessing those skills and would typically need to be purchased if not provided by donation, are recorded at their fair values in the period received as contributions with offsetting expenses. Contributed services, consisting of legal services, for the years ended December 31, 2019 and 2018, respectively, totaled $60,000 and $60,000, respectively. In addition, the Organization received donated services from a variety of unpaid volunteers. The value of these services is not reflected in the accompanying financial statements as these services do not meet the criteria for recognition as contributed services.

Functional Expenses The costs of providing program and supporting services have been summarized on a functional basis in the accompanying statement of functional expenses. The Organization incurs expenses that directly relate to, and can be assigned to, a specific program or supporting activity. The Organization also conducts a number of activities which benefit both its program objectives as well as supporting services (i.e. fundraising and management and general activities). These costs, which are not specifically attributable to a specific program or supporting activity, are allocated by management on a consistent basis among program and supporting services benefited. All expenses are allocated based on total salary and benefit costs, whose distribution to programs is determined based on the estimates of time and effort incurred by personnel.

Advertising Costs Advertising costs are charged to expense as incurred. Advertising costs were $16,701 and $20,953 for the years ended December 31, 2019 and 2018, respectively.

Income Taxes The Organization is exempt from federal income taxes under the provisions of the Internal Revenue Code Section 501(c)(3), and is exempt from state income taxes. The Organization is not a private foundation.

Reclassifications Certain 2018 amounts have been reclassified to conform to the 2019 presentation. These reclassifications have no effect on the previously reported change in net assets.

12 MACCABI USA, INC.

NOTES TO FINANCIAL STATEMENTS

3 - RESTATEMENT

The Organization restated contribution revenue with donor restrictions and the related net assets released from restriction for the year ended December 31, 2018 to properly reflect the net contribution received from a donor which was intended to be restricted for use for the 2021 Maccabiah Games. These contributions and related net assets were previously incorrectly reported as net assets without donor restrictions.

The following table presents the effects of the aforementioned revisions on the statement of financial position and the statement of activities and changes in net assets as of and for the year ended December 31, 2018.

As Previously As Reported Restatement Restated Statement of Financial Position Net assets without donor restrictions $ 102,366 $ (418,580) $ (316,214) Net assets with donor restrictions 122,043 418,580 540,623 Total net assets 224,409 - 224,409

Statement of Activities and Changes in Net Assets Contributions without donor restrictions - general $ 607,169 $ (468,822) $ 138,347 Contributions with donor restrictions - general - 468,822 468,822 Net assets released from restrictions - (50,242) (50,242) Total support and revenue without donor restrictions 2,046,953 (448,684) 1,598,269 Total support and revenue with donor restrictions 93,148 418,580 511,728 Change in net assets without donor restrictions (615,074) (418,580) (1,033,654) Change in net assets with donor restrictions 93,148 418,580 511,728 Net assets, end of year, without Donor restrictions 102,366 (418,580) (316,214) Net assets, end of year, with Donor restrictions 122,043 418,580 540,623

13 MACCABI USA, INC.

NOTES TO FINANCIAL STATEMENTS

4 - LIQUIDITY AND AVAILIBILITY OF RESOURCES

The Organization’s financial assets available within one year of the statement of financial position date for general expenditure are as follows: December 31, 2018 2019 (As Restated) Cash and cash equivalents $ 1,184,611 $ 418,311 Israel bonds 5,000 5,000 Pledge receivable, current - 27,960 Total financial assets available within one year 1,189,611 451,271 Less: amounts unavailable for general expenditures within one year, due to Restricted by donor with purpose restrictions (983,406) (540,623) Total financial assets available to management for general expenditure within one year $ 206,205 $ (89,352)

The Organization’s financial assets available to meet cash needs for general expenditures within one year represents funding for ongoing operational requirements and planned increases in program expenditures in fiscal year 2020.

Liquidity Management The Organization, with oversight of the Board of Directors, maintains any excess funds in an interest bearing cash account.

5 - PLEDGES RECEIVABLE

Pledges receivable are as follows:

December 31, 2019 2018 Gross pledges receivable $ 52,000 $ 94,460 Less allowances for uncollectible pledges (41,500) (47,874) Net pledges receivable $ 10,500 $ 46,586

Amounts due in Less than one year $ - $ 75,834 One to five years 52,000 18,626 Gross pledges receivable $ 52,000 $ 94,460

14 MACCABI USA, INC.

NOTES TO FINANCIAL STATEMENTS

6 - PROPERTY AND EQUIPMENT, NET

Property and equipment consisted of the following:

December 31, 2019 2018 Computer equipment $ 60,062 $ 58,401 Computer software 51,718 51,718 Equipment 17,949 17,949 129,729 128,068 Less accumulated depreciation (124,624) (124,179) $ 5,105 $ 3,889

Total depreciation expense for the years ended December 31, 2019 and 2018 was $445 and $1,377, respectively.

7 - LINE OF CREDIT

The Organization had a revolving line of credit with a credit limit of $700,000 at December 31, 2018. The line of credit expired in July 2019. Upon expiration, the revolving line was reduced to a credit limit of $500,000 and extended through May 30, 2020 and expired as of the date. The Organization is in the process of negotiating another line of credit as of the date of the report. The effective rate as of December 31, 2019 and 2018 was 6.50%. Interest is payable monthly and the line of credit is unsecured. The outstanding balance was $0 and $150,000 as of December 31, 2019 and 2018, respectively.

8 - NET ASSETS WITH DONOR RESTRICTIONS

Net assets with donor restrictions are restricted for the following purposes:

December 31, 2018 2019 (As restated) Subject to expenditure for specified purposes Maccabiah Games 2022 $ 940,935 $ 483,299 European Games 2019 - 15,986 PanAm Games 2019 - 34,157 Other 42,471 7,180 $ 983,406 $ 540,623

Net assets were released from donor restrictions by incurring expenses satisfying the restricted purposes by the expiration of a time restriction or by occurrence of other events specified by donors.

15 MACCABI USA, INC.

NOTES TO FINANCIAL STATEMENTS

8 - NET ASSETS WITH DONOR RESTRICTIONS (Continued)

December 31, 2018 2019 (As Restated) Subject to expenditure for specified purposes Maccabiah Games 2022 $ 137,557 $ 50,242 European Games 2019 15,986 - PanAm Games 2019 34,157 - Other 1,582 - $ 189,282 $ 50,242

9 - FAIR VALUE MEASUREMENTS

The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:

Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Organization has the ability to access. Level 2 Inputs to the valuation methodology include

• quoted prices for similar assets or liabilities in active markets; • quoted prices for identical or similar assets or liabilities in inactive markets; • inputs other than quoted prices that are observable for the asset or liability; • inputs that are derived principally from or corroborated by observable market data by correlation or other means. If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability. Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques maximize the use of relevant observable inputs and minimize the use of unobservable inputs.

16 MACCABI USA, INC.

NOTES TO FINANCIAL STATEMENTS

9 - FAIR VALUE MEASUREMENTS (Continued)

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2019.

Israel bonds – The fair value of these securities is estimated based on models considering the estimated cash flows and expected yield. These securities have a contractual term.

The following table summarizes investment assets measured at fair value at December 31, 2019 and 2018. No change in value noted during the year ended December 31, 2019.

Investments at Fair Value Level 1 Level 2 Level 3 Total Israel bonds $ - $ 5,000 $ - $ 5,000 Total assets in the fair value hierarchy $ - $ 5,000 $ - $ 5,000

10 - CONCENTRATION OF CREDIT RISK

The Organization maintains cash at various financial institutions. At times, cash in these accounts may exceed the Federal Deposit Insurance Corporation limit of $250,000. At December 31, 2019, the uninsured cash balance was approximately $1,039,000. The Organization has not experienced any losses in such accounts.

11 - COMMITMENTS

Lease agreements The Organization has an office lease agreement with a company owned by a board member. The term of the lease was through November 30, 2019 with an extension of an additional five years through November 2024. The extension was renegotiated and executed subsequent to year end under new terms, whereas the interim agreement was month-to-month. The amended lease term begins March 1, 2020 through December 31, 2023, and allows for an extension of an additional two years through December 31, 2025.

The original lease agreement contained rent holidays and rent escalation clauses. US GAAP requires rent expense to be recognized on a straight-line basis over the lease term. The difference between the rent due under the stated periods of the lease compared to that of the straight-line basis is recorded as deferred rent. At December 31, 2019 and 2018, deferred rent of $0 and $11,551, respectively, is included in the statements of financial position.

17 MACCABI USA, INC.

NOTES TO FINANCIAL STATEMENTS

11 - COMMITMENTS (Continued)

Lease agreements (Continued) Rent expense, including taxes and operating expenses, for the years ended December 31, 2019 and 2018, was $90,845 and $64,010, respectively.

Future minimum lease commitments required under the lease agreement are as follows:

Year Ending December 31, 2020 $ 30,432 2021 63,156 2022 65,556 2023 68,040 $ 227,184

Employment Agreements On occasion, the Organization will enter into employment contracts with key employees. The contracts typically provide for minimum guaranteed compensation, as well as certain employee benefits. Future minimum employment commitments required under employment contracts are as follows:

Year Ending December 31, 2020 $ 208,075 2021 215,373 2022 225,086 2023 115,288 $ 763,822

12 - RETIREMENT PLAN

The Organization has a 403(b) retirement plan. The plan covers all employees meeting certain eligibility requirements. Employees voluntarily make contributions to the Plan based upon limits established under the Internal Revenue Code. In addition, the Organization may make nonelective contributions as defined by the plan. These contributions for the years ended December 31, 2019 and 2018 totaled $13,056 and $11,321, respectively.

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NOTES TO FINANCIAL STATEMENTS

13 - RELATED PARTY TRANSACTIONS

The Organization has common board members with the Endowment Fund of Maccabi USA.

For the years ended December 31, 2019 and 2018, the Organization received grants and contributions from the Endowment Fund of Maccabi USA totaling approximately $420,000 and $469,000, respectively.

Included in due from related party as of December 31, 2019 and 2018 was $15,105 and $5,703, respectively, due from Endowment Fund of Maccabi USA.

In the ordinary course of business, the Organization utilizes vendors that are owned by a certain board member of the Organization, including a travel agency and office lease. During the years ended December 31, 2019 and 2018, the Organization paid these entities $533,415 and $542,545, respectively.

14 - UNCERTAIN TAX POSITIONS

Management of the Organization considers the likelihood of changes by taxing authorities in its filed income tax returns and recognizes a liability or discloses potential significant changes that management believes are more likely than not to occur upon examination by tax authorities, including changes to the Organization's status as a not-for profit entity. Management believes that the Organization met the requirements to maintain its tax-exempt status and has no income subject to unrelated business income tax, therefore no provision for income taxes has been provided in these financial statements.

15 - SUBSEQUENT EVENTS

The Organization has evaluated events and transactions for potential recognition or disclosure in the financial statements through November 20, 2020, the date on which the financial statements were available to be issued.

Maccabi USA’s operations may be affected by the recent and ongoing outbreak of the coronavirus disease 2019 (COVID-19) which in March 2020, was declared a pandemic by the World Health Organization. The ultimate disruption which may be caused by the outbreak is uncertain; however it may result in a material adverse impact on the Maccabi USA’s financial position, activities and net assets, and cash flows. Possible areas that may be affected include, but are not limited to, disruption to the Maccabi’s contributions, program revenues, and fundraising events. As a result of the pandemic, the Maccabiah games, originally scheduled for June 2021, have been postponed to July 2022.

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NOTES TO FINANCIAL STATEMENTS

15 - SUBSEQUENT EVENTS (Continued)

As a result of COVID-19, on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the “Act”) was signed into law. The Act amends the Small Business Act to include a new guaranteed, unsecured loan program (the “Paycheck Protection Program”). The Organization applied for a loan under the Paycheck Protection Program. On April 14, 2020, the loan was approved in the amount of $132,600. The loan has a term of two years and is subject to interest of 1%. Interest (and potential principal payments) is deferred for the first six months. Subject to certain conditions as defined in the Act, up to 100% of the loan may be forgiven.

In addition, the Organization received an Economic Injury Disaster Loan (EIDL) advance in the amount of $150,000 on August 6, 2020. The loan has a term of thirty years and is subject to interest of 2.75% per annum. Monthly installment payments, including principal and interest, of $641 will begin on August 6, 2021.

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